I’ve made huge errors and hope it’s not too late

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Fixitfelix
Posts: 9
Joined: Thu Dec 14, 2017 11:17 am

I’ve made huge errors and hope it’s not too late

Post by Fixitfelix » Thu Dec 14, 2017 11:34 am

I’ve here to get this off my chest and hope it’s not too late. My only regret is that I found this site late.

Ages 38, past 8 years I’ve pretty much missed the run up and failed to invest any money into the markets. This was related to a few factors. Pessimistic view, changes in life and family and now what I’ve come to realize is a sort of hoarding mentality that goes back to me growing up as a very poor kid.

I was pretty much in charge of the finances and just kept pushing things off while we bought a house, invested in it and raised 2 kids to school age. In doing so I just never really felt good about the markets, and had 401k money in bonds etc. money was being saved but not once out of that whole time did I dip back in. We had the house, expenses and I just adopted a save hoard mentality. All in all I just didn’t pay much attention. I only wish I found this site earlier.

So at the very least we have a house has appreciated $400k, in my mind I thought the house offset any additional risk I really wanted to take in the markets with $$. I realize I have been flat wrong!,

So since reading here and waking up..... I need to move on (it’s been very hard as I keep beating myself up) and see forward. We have plenty to be thankful for and I don’t want to throw myself a pity party. I do realize I grew up poor and in the back of my mind that’s the lack of risk taker in me.

Ok going forward ...we have time, and I hope it’s enough.
Income $200k+ Now ( recently went up. Majority of that 8 yr kid time was 130-150k)
401k current $210 k
Ira $5.5k started last year
Savings checking $125k..... another dumb move has been $100k for a while
Kids college funds $25k, $20k

Debt other than house $0
Home equity $400k

After reading here I’ve decided to allocate some of the 401k to the international, domestic and bond mix....still struggling to just do it all.

I am in process of opening solo 401k and will do $20k this year
Will do Roth’s for both and max goin* forward.
401k account above has been max $18k and will stay that way
I realize I need an after tax account and will open this year.

I think I can go on and on....but I guess I need to know should I just hire someone going forward?
If we attack retirement for the next 20-25 years, can we make it? Income should go up somewhat.

mhalley
Posts: 5827
Joined: Tue Nov 20, 2007 6:02 am

Re: I’ve made huge errors and hope it’s not too late

Post by mhalley » Thu Dec 14, 2017 3:17 pm

Many people put off thinking about retirement until they are around your age. The great news is that you have a huge income and no non mortgage debt. If you buckle down and start saving at a high rate, you can do it. Check out Mr Money Mustache post on simple math, run some retirement planners at firesim, etc, post your portfolio question in the preferred format and you won’t need to hire a FP.

http://www.mrmoneymustache.com/2012/01/ ... etirement/
http://cfiresim.com/
https://www.bogleheads.org/wiki/Asking_ ... _questions

User avatar
siamond
Posts: 3970
Joined: Mon May 28, 2012 5:50 am

Re: I’ve made huge errors and hope it’s not too late

Post by siamond » Thu Dec 14, 2017 3:44 pm

If you search a bit this forum, you'll find a few threads about past financial mistakes, and realize that many of us did much worse than you did by the way we were 40... Interestingly, making such severe mistakes (and understanding their impact) might be the best way to learn... So stop beating yourself, and just move forward.

Based on your current situation, I'd say you're actually in an ok shape IF you save aggressively from now on, and stop being so afraid of the bogeyman. Sure enough, you missed a really nice bull market, but just look at market history over 100 years, and you'll realize that things go up and down and up and down, and there is no reason this would stop. It can easily be mathematically proven that it is better to be invested AT ANY TIME than sitting on cash being afraid of the next drop (and remember, we just never know ahead of time when it will happen).

One very simple way to do it is to use a LifeStrategy fund. This is basically the same as investing in 4 funds (US stocks, Int'l Stocks, US bonds, Int'l bonds) where the rebalancing is automatically done for you, but it is actually a single fund and fees are very low. Given your past fears about the stock market, maybe a 60/40 top-level allocation would be a good choice for you to get started, and here is an example of such fund.

Overall, here is my primary advice for you. We're always (understandably) nervous about what we don't know. The answer to that is to learn. Maybe you could do a very simple move as the one I just suggested, so that your money stops sitting around unused. And then start reading some good literature about the history of stock markets and passive investing. Personally, I really like Dr Bernstein (e.g. start by '4 pillars of investing', then read 'deep risk'). Once you've accumulated more knowledge (do take your time and be thorough), then you can refine your strategy and make a truly personalized plan for yourself. And no, you don't need to pay a financial advisor to do so, you have the Bogleheads forum as a free and unbiased support structure.

anglophile
Posts: 26
Joined: Tue Dec 12, 2017 6:57 pm

Re: I’ve made huge errors and hope it’s not too late

Post by anglophile » Thu Dec 14, 2017 3:51 pm

Give yourself a pat on the back! Don't be so hard on yourself. You have done OK for someone your age. Lots of people have no savings at all.

I'm not in a position to give advice (too much of a newbie) but I'm impressed with what you have done so far.

User avatar
onthecusp
Posts: 410
Joined: Mon Aug 29, 2016 3:25 pm

Re: I’ve made huge errors and hope it’s not too late

Post by onthecusp » Thu Dec 14, 2017 3:53 pm

Many people here never feel good about the markets.
Either they just went down (who wants to buy into poor performance) or they just went up (nothing goes up forever).

Most people here are in the market all the time.
A saying you will run into is: Time in the market, not timing the market. You have lots of time and it is not too late.

Find a good asset allocation and get to it!

User avatar
Ethelred
Posts: 337
Joined: Sun Oct 30, 2016 9:38 am

Re: I’ve made huge errors and hope it’s not too late

Post by Ethelred » Thu Dec 14, 2017 3:54 pm

You are actually in a good position.

Investing for retirement consists of two things:
1. Saving for retirement.
2. Investing those savings to generate growth through compound interest.

Point 1 has a bigger impact than point 2 for almost everyone, and you seem to already be doing that.

aristotelian
Posts: 4226
Joined: Wed Jan 11, 2017 8:05 pm

Re: I’ve made huge errors and hope it’s not too late

Post by aristotelian » Thu Dec 14, 2017 3:56 pm

You have an income of $200K and 20+ years to invest. At age 38, most Americans barely have positive net worth. You will be fine.

Is your house paid off? That is somewhat unorthodox but still a really good problem to have.

If you are risk averse, I would suggest a conservative allocation such as 60/40. The last thing you want to happen is to jump in at the end of a bull market, only to have the market correct.

You might consider the story of the world's worst market timer as a worst case scenario. http://awealthofcommonsense.com/2014/02 ... ket-timer/

User avatar
Sandtrap
Posts: 4939
Joined: Sat Nov 26, 2016 6:32 pm
Location: 10/90 Allocation - Hawaii😀 Northern AZ.😳

Re: I’ve made huge errors and hope it’s not too late

Post by Sandtrap » Thu Dec 14, 2017 4:02 pm

Welcome :D
It's wonderful that you've "arrived".
Many have come before you far later so don't beat yourself up. . too badly. . or a little more if you are inclined. :shock:

Here is a large toolbox to immerse yourself in.
Once going through it, you will know whether you need a financial adviser or Vangard VPAS services, you will know the portfolio allocation that fits you best, and, once formulating an IPS (personal investment policy statement with financial goals), you will know the steps to go from what you have now to where you need to be when retiring.

In general, the steps are: EF 6 mos. adjusted to fit your savings and future needs and income stream. Pay down debt with highest interest first. Ascertain allocation. Simplify portfolio funds and eliminate overlap, also reduce ER, also fill "non taxable space" before "taxable space". More details below.

Onward. . .

Some helpful links:

Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212
Bogle Philosophy
https://www.bogleheads.org/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Bogleh ... rt-up_kit
Define General Investment Goals and Objectives
https://www.bogleheads.org/wiki/Invest ... statement
Outline of Investing
https://www.bogleheads.org/wiki/Outline_of_investing
Outline of Financial Planning (with links)
https://www.bogleheads.org/wiki/Outlin ... _planning
Funding Priority
https://www.bogleheads.org/wiki/Priori ... vestments
Tax Efficient Fund Placement
https://www.bogleheads.org/wiki/Tax-ef ... _placement
Asset allocation in multiple accounts
https://www.bogleheads.org/wiki/Asset ... accounts

Suggested Reading List
https://www.bogleheads.org/RecommendedReading.php
Forum Library of Investing Advice with links
https://www.bogleheads.org/wiki/Main_Page

Outstanding write up on the 64/40 allocation by Bernstein. A treasure.
http://web.archive.org/web/20061214061 ... in6040.pdf

Free Reading: "If You Can" by Bernstein
https://www.google.com/url?sa=t&rct=j& ... -SB3S580I5

ONLINE FINANCIAL TOOLS
PORFOLIO VISUALIZERS, PROJECTIONS, AND ANALYSIS
https://www.portfoliovisualizer.com
(enter your existing funds and then tweak as needed to get your results that fit your goals)

Firecalc. Retirement. How long will your money last?
https://www.firecalc.com

Ollie123
Posts: 54
Joined: Mon Aug 29, 2016 11:39 am

Re: I’ve made huge errors and hope it’s not too late

Post by Ollie123 » Thu Dec 14, 2017 4:11 pm

When I read "huge error" I was expecting you were 250k in the hole and about to lose your house and declare bankruptcy. This is clearly a bogleheads "huge error", which is kind of like the kid in class who gets a 95% on the exam and is absolutely furious they didn't get a 100%. Your situation isn't perfect, but you are on a good path. You could make some relatively minor adjustments and make it a great path.

We're a few years younger than you, but launched fairly late (grad school) and are unlikely to be much further ahead of you by the time we're your age. I consider us in solid shape and certainly wayyyyy ahead of most. You missed a market upswing but guess what...I guarantee there will be another one. In fact, I guarantee you'll get to experience more than one. Just don't give in to the paralysis/anxiety and make sure you are taking action from this point forward to invest.

User avatar
Meg77
Posts: 2311
Joined: Fri May 22, 2009 1:09 pm
Location: Dallas, TX
Contact:

Re: I’ve made huge errors and hope it’s not too late

Post by Meg77 » Thu Dec 14, 2017 4:17 pm

You're doing great! Shake off your guilt and move ahead confidently. Your net worth is pushing $800K, your income is $200K, you own a home, and you have a six figure emergency fund. Oh and you're in your 30s. Only on this wacko website is that "behind" in any sense of the word.

You are 38. You could live another 60 years. You will see lots more recessions and lots more bull markets. Pick an asset allocation - I recommend 30-40% bonds given your timidity - and just buy and hold and buy and hold and buy and hold until you have enough to retire. The market will be a roller coaster, but you will be fine as long as you don't jump off!

When you look back 10+ years from now, that time when you had "only" $215K in retirement will seem like forever ago, and you will wish you had bought more at today's prices no matter where prices go in the short term from here. Think of your future self when you get scared. Look at your parents now if they are living and think about what they could/should have done at your age.

Edited to add: if it makes you feel better, a man I know did the same thing you did and exited the market about 8 years ago. He moved all his money to cash. The difference is that he was 50 when he did it. He makes great money, but there's no telling how many millions he missed out on by staying in all cash the last 8 years - his prime earning years and what could and should have been that final major uptick at the end of the compound interest chart. Guess who is still working (and commuting hours a day) instead of retiring at 55 like he wanted to?
Last edited by Meg77 on Thu Dec 14, 2017 4:22 pm, edited 1 time in total.
"An investment in knowledge pays the best interest." - Benjamin Franklin

Fixitfelix
Posts: 9
Joined: Thu Dec 14, 2017 11:17 am

Re: I’ve made huge errors and hope it’s not too late

Post by Fixitfelix » Thu Dec 14, 2017 4:19 pm

To all the responses a big Thank You!


I will continue to dig on this site and get the plan up running and not look back but forward!


Just to clarify home is not free and clear. No debt other than mortgage.

retire57
Posts: 376
Joined: Fri Oct 28, 2016 3:03 pm

Re: I’ve made huge errors and hope it’s not too late

Post by retire57 » Thu Dec 14, 2017 4:24 pm

You are in good shape. DH and I didn't get serious about saving for retirement until we were about your age. And we are doing great despite 2 bear markets along the way. What's made the biggest difference has been living frugally and staying out of debt for 20-plus years. Keep coming back here to stay on-course and you will win the game!

SimplicityNow
Posts: 453
Joined: Fri Aug 05, 2016 10:31 am

Re: I’ve made huge errors and hope it’s not too late

Post by SimplicityNow » Thu Dec 14, 2017 4:33 pm

The information on this board is great.

Might I suggest a few books as well?

The Bogleheads Guide to Investing

All About Asset Allocation by Rick Ferri

You have the most important advantage. Time.

User avatar
goingup
Posts: 3123
Joined: Tue Jan 26, 2010 1:02 pm

Re: I’ve made huge errors and hope it’s not too late

Post by goingup » Thu Dec 14, 2017 5:06 pm

I'm a bit more dour than the other posters. :shock: This is just my opinion, but you should proceed with caution. I've read that advisors discuss clients like you as being their biggest challenge. You are now being lured into the market because you can't stand the regret any longer. You feel you have missed out and how risky can the market be that goes up, up, up? So you'll finally get solidly into equities, but the minute stocks crater you will inevitably fold. This will affirm your conviction that you were wise to abstain all these years. (Just saying this is the pattern I've observed.)

The best thing you can do for yourself is really understand how you'll feel when you watch your money evaporate. In 2008-2009 I watched our $600K portfolio shrink to $385K. That was painful and it felt like there was no end to it. I wasn't particularly shrewd or brave, but I was patient. You've got to hang on in these situations or you'll hurt yourself financially.

Start small and see how you feel. Keep what can't afford to lose in cash/bonds. Put new 401K contributions in 100% stock funds or a Target Date fund. Read about financial behavior. Read books by John Bogle. Set yourself up slow and steady success as an investor! :beer

Finridge
Posts: 376
Joined: Mon May 16, 2011 7:27 pm

Re: I’ve made huge errors and hope it’s not too late

Post by Finridge » Thu Dec 14, 2017 5:07 pm

Don't beat yourself up. You are in a better position then most people your age.

User avatar
bottlecap
Posts: 5617
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: I’ve made huge errors and hope it’s not too late

Post by bottlecap » Thu Dec 14, 2017 5:11 pm

Welcome. You're in great shape. Don't beat yourself up.

Saving and not investing is A LOT better than not saving, or saving and blowing it on risky investments.

First, you need to read up on this site as much as you can. Try the wiki. Maybe buy some books.

Second, start investing in your 401ks and IRAs. At least start putting money in there in stable value funds until you are comfortable with something else.

Third, decide what to do with your current after-tax savings. Do you need that much? If not, how much to you need to keep liquid?

Fourth, figure out how to invest your after-tax savings, if at all. This is far down the line. Come back for help if you need it.

Don't do anything too quickly or too rashly. Make sure you are comfortable with all your moves and have a fair understanding of the downside risk. You may have missed some market gains, but don't rush in too soon an possibly lose what you have saved when you are least prepared for it. I don't know that it is correct to say that markets are most dangerous at their highs, but they certainly seem to have a lot further to fall than during their lows.

Good luck,

JT

FoolMeOnce
Posts: 187
Joined: Mon Apr 24, 2017 11:16 am

Re: I’ve made huge errors and hope it’s not too late

Post by FoolMeOnce » Thu Dec 14, 2017 5:20 pm

Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
Will do Roth’s for both and max goin* forward.
You are above the Roth income limit. Look into backdoor Roths if you are set on that.

With your income I think you are in fine shape and can make up ground quickly if you keep your expenses in check.

Fallible
Posts: 6386
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: I’ve made huge errors and hope it’s not too late

Post by Fallible » Thu Dec 14, 2017 6:11 pm

Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am

So since reading here and waking up..... I need to move on (it’s been very hard as I keep beating myself up) and see forward. We have plenty to be thankful for and I don’t want to throw myself a pity party. I do realize I grew up poor and in the back of my mind that’s the lack of risk taker in me. ...
As has been noted here, you are doing well, so no need to bother with regret and beating up on yourself.

One area of investing you will want to focus on now is risk tolerance, to address the references you've made about avoiding market risk and to understand how to deal with it. Good places to begin are the "Risk Tolerance" and "Asset Allocation" pages in our wiki (need, ability, and willingness to take risk); Rick Ferri's book, All About Asset Allocation, 2nd edition updating risk tolerance, and The Bogleheads' Guide to Investing, chapter 19, "Mastering Your Investments Means Mastering Your Emotions."

https://www.bogleheads.org/wiki/Risk_tolerance
https://www.bogleheads.org/wiki/Asset_allocation
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

User avatar
TNL
Posts: 354
Joined: Sat Jul 25, 2015 2:13 pm

Re: I’ve made huge errors and hope it’s not too late

Post by TNL » Thu Dec 14, 2017 6:21 pm

Ollie123 wrote:
Thu Dec 14, 2017 4:11 pm
When I read "huge error" I was expecting you were 250k in the hole and about to lose your house and declare bankruptcy. This is clearly a bogleheads "huge error", which is kind of like the kid in class who gets a 95% on the exam and is absolutely furious they didn't get a 100%. Your situation isn't perfect, but you are on a good path. You could make some relatively minor adjustments and make it a great path.

We're a few years younger than you, but launched fairly late (grad school) and are unlikely to be much further ahead of you by the time we're your age. I consider us in solid shape and certainly wayyyyy ahead of most. You missed a market upswing but guess what...I guarantee there will be another one. In fact, I guarantee you'll get to experience more than one. Just don't give in to the paralysis/anxiety and make sure you are taking action from this point forward to invest.
That's what I thought as well. I also agree, with this kind of positive income and no debt other than mortgage, you are doing great. And welcome to our website.

I have another book recommendation for you. It is "The Affluent Investor" by Phil Demuth and I read it when I turned 40, 4 years ago. I was actually in a little worse shape than you as I had more put away, but also quite a bit more debt. It is the most valuable book that I have read for my own personal finances and getting my retirement situation and paying for child's college in order. It is a very fast read; I read it in one weekend and he's a good writer with lots of funny one liners. I would recommend hanging around this site for 2-3 months, read the books that have been recommended, and then consider a FA if you think you still need one.

larryslocum1982
Posts: 39
Joined: Sat Dec 09, 2017 10:36 pm

Re: I’ve made huge errors and hope it’s not too late

Post by larryslocum1982 » Thu Dec 14, 2017 6:53 pm

<t>You are in great shape. Just do not put all in stocks at once with market this high.<br/>
Put a little bit in an index fund every month.</t>

getthatmarshmallow
Posts: 148
Joined: Mon Dec 04, 2017 9:43 am

Re: I’ve made huge errors and hope it’s not too late

Post by getthatmarshmallow » Thu Dec 14, 2017 6:58 pm

FWIW, I'm your age with less saved (late launch with grad school/career change), with two kids, no debt other than the remaining mortgage and a small car payment, but a lifelong habit of living within my means. I know that I have ground to make up, but I'm not particularly worried, as when I read the Bogleheads' book, I realized that that was me; I just needed to learn how to invest. The hard part for most is the saving and you've got that.

User avatar
catdude
Posts: 1500
Joined: Mon Jul 16, 2007 8:11 pm
Location: Central Oregon

Re: I’ve made huge errors and hope it’s not too late

Post by catdude » Thu Dec 14, 2017 7:09 pm

OP, you're doing a whole lot better than I was doing at 38, so don't feel badly. I made a ton of mistakes when I was younger. A couple months ago I started a thread on this topic, and many folks chimed in. I think you would benefit by reading it... take a look:

viewtopic.php?t=228527
catdude | | "I yield to the gentleman for a few feeble remarks." (Congressman Thaddeus Stevens)

epictetus
Posts: 496
Joined: Sat Mar 10, 2007 6:43 pm

Re: I’ve made huge errors and hope it’s not too late

Post by epictetus » Thu Dec 14, 2017 7:12 pm

what are your monthly costs?

you have a large income and a lot already saved.

if your income is large enough and costs small enough you may be able to get to your goals without taking much/any risk in stocks.

i would be very cautious re: getting back into the stock market now unless you can tolerate seeing the money you have allocated to stocks drop by 50% anytime and stay there for awhile.

if you do decide to get back into stocks i would encourage you to do so with a smaller percentage allocation than you think you can tolerate and then increase over time if you are tolerating the volatility ok.

and one of the all-in-one funds might be something to consider
Focus on what you can control

ASpenderInRecovery
Posts: 107
Joined: Sat Jul 29, 2017 9:17 am

Re: I’ve made huge errors and hope it’s not too late

Post by ASpenderInRecovery » Thu Dec 14, 2017 7:21 pm

Read these 2 books:

Boglehead’s Guide to Investing
Little Book of Common Sense Investing

Optional Third:
Why Smart People Make Big Money Mistakes

After reading come up with an investment strategy with a desired asset allocation. Come back here and post your portfolio and ask for recommendations on how to get there. Make sure you read the portfolio posting tips as it will make the posting process easier for you and immenseley easier for people here to provide solid recommendations based on your whole situation.

Although it’s not ideal you have missed a portion of this bull market you could argue you are in a good spot to rebalance or lump sum invest some of your cash after a market correction.

Fixitfelix
Posts: 9
Joined: Thu Dec 14, 2017 11:17 am

Re: I’ve made huge errors and hope it’s not too late

Post by Fixitfelix » Thu Dec 14, 2017 8:05 pm

Thanks again to the rest of the posters.

I have started the process in the 401k at least moving some to stock funds, and with new contributions forward going to those said funds, I may end up DCA over some time with the other monies and accounts. I appreciate the advice on taking it slow , and now realize there is no reason to panic. My goal is use this site, those references and possibly books and get the plan in place.

I would be lying if I didn’t say I was very worried about the feedback once I posted this .But have breathed a sigh of relief, and will not look back.

TheAncientOne
Posts: 140
Joined: Wed Jul 19, 2017 8:53 pm

Re: I’ve made huge errors and hope it’s not too late

Post by TheAncientOne » Thu Dec 14, 2017 8:26 pm

The key to long term success is to keep investing in good markets and bad. Nothing can be quite so disheartening as finally investing in equities just before the bear market begins. Notwithstanding all the talk on this site about the importance of low management fees, studies have shown that the average investor greatly underperforms whatever mutual fund he/she chooses because panic sets in at market bottoms and no new money goes in or even worse, accounts are liquidated. Given that you've probably got 25 years or more to your career, I'd go with a more aggressive 80/20 mix of equities/fixed income and just grit my teeth and keep investing when the market is at its lows but you alone have to judge whether you're capable of plowing ahead when your account goes down 35% or even more.

JBTX
Posts: 3357
Joined: Wed Jul 26, 2017 12:46 pm

Re: I’ve made huge errors and hope it’s not too late

Post by JBTX » Thu Dec 14, 2017 8:39 pm

I’m confused in you have a 401k and want to start a solo 401k. It isn’t clear if you are employed , self employed or both.

Solo 401k is for self employed. You can only contribute $18k per year total tax deferred to various 401ks in total. You can’t double up the tax deferred amount. You CAN contribute more than 18k if your plan allows it but it will not be tax deferred, and thus is probably not worth doing unless you plan to eventually roll that money into a Roth IRA (which depends on whether the plan will allow distributions)
Last edited by JBTX on Thu Dec 14, 2017 8:41 pm, edited 1 time in total.

snowox
Posts: 170
Joined: Wed Nov 08, 2017 9:17 am

Re: I’ve made huge errors and hope it’s not too late

Post by snowox » Thu Dec 14, 2017 8:40 pm

Yes you made some financial mistakes by not participating in the markets BUT you did well otherwise and are way ahead of most people your age so thats the reality. As others mentioned as long as you get going now with your income, lack of debt you could easily retire early if you wanted to. So in your case your not to late but just get going after you do some homework using many of the tools people already provided for you. Good Luck!

Fixitfelix
Posts: 9
Joined: Thu Dec 14, 2017 11:17 am

Re: I’ve made huge errors and hope it’s not too late

Post by Fixitfelix » Thu Dec 14, 2017 8:49 pm

JBTX wrote:
Thu Dec 14, 2017 8:39 pm
I’m confused in you have a 401k and want to start a solo 401k. It isn’t clear if you are employed , self employed or both.

Solo 401k is for self employed. You can only contribute $18k per year total tax deferred to various 401ks in total. You can’t double up the tax deferred amount. You CAN contribute more than 18k if your plan allows it but it will not be tax deferred, and thus is probably not worth doing unless you plan to eventually roll that money into a Roth IRA (which depends on whether the plan will allow distributions)
Fully aware, Solo is SE spouse income. Just figured it out was a great way to force retirement savings and save on federal tax.

User avatar
CyclingDuo
Posts: 1528
Joined: Fri Jan 06, 2017 9:07 am

Re: I’ve made huge errors and hope it’s not too late

Post by CyclingDuo » Thu Dec 14, 2017 9:54 pm

Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
I’ve here to get this off my chest and hope it’s not too late. My only regret is that I found this site late.

Ages 38, past 8 years I’ve pretty much missed the run up and failed to invest any money into the markets. This was related to a few factors. Pessimistic view, changes in life and family and now what I’ve come to realize is a sort of hoarding mentality that goes back to me growing up as a very poor kid.
Well, you've only missed one run up off the Financial Crisis lows in 2009. Trust us, the decline into those lows was not too fun where most of us took a 35 - 54% haircut. And that was after a previous nasty haircut we all took coming off of the dot.com bust that began in 2000. It was a true secular bear market that lasted well over a decade. The bull market you are speaking of having missed really broke out - or "began" in 2013. And the Nasdaq "broke out" after 16 years of going nowhere in July of 2016. So, in terms of the larger picture - you really haven't missed that much outside of quarterly dividends, dollar cost averaging, and the reinvestment of the dividends.

We would suggest not beating yourself up over it - especially since you have put money away for your children's college education, you have been paying down your mortgage, and you have six figures in your 401k, six figures in your checking account, started a tIRA and have no debt outside of your mortgage (which is probably a low interest loan).

In other words: RELAX! You are in dang good shape for age 38 compared to the majority of the world at age 38.
Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
I was pretty much in charge of the finances and just kept pushing things off while we bought a house, invested in it and raised 2 kids to school age. In doing so I just never really felt good about the markets, and had 401k money in bonds etc. money was being saved but not once out of that whole time did I dip back in. We had the house, expenses and I just adopted a save hoard mentality. All in all I just didn’t pay much attention. I only wish I found this site earlier.
You've found it now - and you still have plenty of time on your side. Time, the power of compounding, and your human capital are going to serve you well from this point on, have no fear. You were raising kids, and had your money invested in the middle of a major bull market in bonds. Consider yourself fortunate! :idea:
Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
So at the very least we have a house has appreciated $400k, in my mind I thought the house offset any additional risk I really wanted to take in the markets with $$. I realize I have been flat wrong!,

So since reading here and waking up..... I need to move on (it’s been very hard as I keep beating myself up) and see forward. We have plenty to be thankful for and I don’t want to throw myself a pity party. I do realize I grew up poor and in the back of my mind that’s the lack of risk taker in me.
Your house is an asset, and it is a place to live. Stop beating yourself up. No need for a pity party. Seriously. :!:
Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
Ok going forward ...we have time, and I hope it’s enough.
Time and the percentage of what you can save pre-tax and after-tax will determine your success given you get it in the right asset allocation. No doubt that working to full retirement age is going to be on your plate, so make sure you stay current with your job skills and progress in your career to mitigate the risk of being "let go" in your 50's before you have save and invested enough to meet your nest egg goals.
Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
Income $200k+ Now ( recently went up. Majority of that 8 yr kid time was 130-150k)
401k current $210 k
Ira $5.5k started last year
Savings checking $125k..... another dumb move has been $100k for a while
Kids college funds $25k, $20k

Debt other than house $0
Home equity $400k
Great salary to work with for stashing away into savings/investments. Dual household income, or single earner? Max the 401K for sure. If a dual income, both need to max. If not a dual income household, can your spouse get some work to contribute money to investments for the future as well?

Are the kids college funds currently in conservative investments such as bonds? You'll want that allocation targeting at least moderate growth.
Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
After reading here I’ve decided to allocate some of the 401k to the international, domestic and bond mix....still struggling to just do it all.
Easy to do the Three Fund Portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio

70/30 or 65/35 should fit your profile, age and goals.
Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
I am in process of opening solo 401k and will do $20k this year
Will do Roth’s for both and max goin* forward.
401k account above has been max $18k and will stay that way
I realize I need an after tax account and will open this year.
I doubt you will qualify for Roth IRA's based on your salary. But your AGI should allow you to at least contribute a tIRA for your spouse.

http://www.rothira.com/2017-roth-ira-limits-announced

However, certainly max out the 401k (goes up to $18.5K for 2018).

What about a HSA? What about saving some in taxable?
Fixitfelix wrote:
Thu Dec 14, 2017 11:34 am
I think I can go on and on....but I guess I need to know should I just hire someone going forward? If we attack retirement for the next 20-25 years, can we make it? Income should go up somewhat.
You don't need to "hire" anyone. What you do need to do is get money rolling in via your monthly contributions in the proper asset allocation of equities/bonds, as well as get what you have sitting in cash (and part of the bonds) into the proper asset allocation. It's guaranteed to be a bumpy ride as that is part of the risk/reward for the long term. The good news is the money you will have going in every month will benefit from the lows during the bumpy ride.

You'll have to save more every month at age 38 than if you were 25, but c'est la vie. Embrace it and have at it. No time to lose from this day going forward...
Last edited by CyclingDuo on Thu Dec 14, 2017 11:06 pm, edited 1 time in total.
M1 Finance - Set up your Three Fund Portfolio for free using VTI, VXUS, BND!

Fixitfelix
Posts: 9
Joined: Thu Dec 14, 2017 11:17 am

Re: I’ve made huge errors and hope it’s not too late

Post by Fixitfelix » Thu Dec 14, 2017 10:58 pm

CyclingDuo

Thanks for the long detailed smack and great information, it is really appreciated.

Income for now is 80/20 no reason spouse income does not climb going forward now that kids are school age. Any increase there will be put away!

Kids college funds are with a state guarantee program we have here that is well regarded and locks in guaranteed tuition at state schools or can be used elsewhere. Most say it is a great deal, will continue to contribute each year.

HSA, we have never really looked into this. We always end up with one of the plans offered not wanting to risk a High Deductible plan with 2 young kids. I will dig further.
401k will always be maxed , Solo taken advantage of or maxed if becomes 401k with employer.
Taxable, will plan on opening a taxable account and chipping away with Vanguard.

This whole deal has been a great exercise and I must say I feel 100 times better than I did this AM (and last few days if I was to be honest).

Thanks to everyone!

sambb
Posts: 2040
Joined: Sun Mar 10, 2013 3:31 pm

Re: I’ve made huge errors and hope it’s not too late

Post by sambb » Thu Dec 14, 2017 11:57 pm

You could invest and the market fall a bunch. Pick a comfy allocation, as you could lose more. Or make more. no one knows,

Shikoku
Posts: 270
Joined: Fri Oct 27, 2017 11:01 pm
Location: USA

Re: I’ve made huge errors and hope it’s not too late

Post by Shikoku » Fri Dec 15, 2017 12:38 am

OP,
You are just fine. Congratulate yourself for your accomplishment and earning potential. I got my first job when I was 36 and had pretty much no saving. My salary was $65K. Although some people commented that I do not have a "strong foundation or understanding in financial management" (viewtopic.php?f=2&t=233001&start=50#p3644724), I sleep well at night. You also please do the same but start investing! :D
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

voodoo72
Posts: 40
Joined: Wed Nov 15, 2017 1:20 pm

Re: I’ve made huge errors and hope it’s not too late

Post by voodoo72 » Fri Dec 15, 2017 9:48 am

Ollie123 wrote:
Thu Dec 14, 2017 4:11 pm
When I read "huge error" I was expecting you were 250k in the hole and about to lose your house and declare bankruptcy. This is clearly a bogleheads "huge error", which is kind of like the kid in class who gets a 95% on the exam and is absolutely furious they didn't get a 100%. Your situation isn't perfect, but you are on a good path. You could make some relatively minor adjustments and make it a great path.

We're a few years younger than you, but launched fairly late (grad school) and are unlikely to be much further ahead of you by the time we're your age. I consider us in solid shape and certainly wayyyyy ahead of most. You missed a market upswing but guess what...I guarantee there will be another one. In fact, I guarantee you'll get to experience more than one. Just don't give in to the paralysis/anxiety and make sure you are taking action from this point forward to invest.

HEHE, I felt the same way, BH world is very different than the outside world, at 38 with 800K in assets little debt, you are wayyy ahead of people your age, look it up you will see.. Let me give you some perspective, at 38 I had a negative networth of -200k+ back in 2010. Seven years later I am in the 2 comma club.. Its not easy but rest assured if you keep plugging away you will be just fine....Yes I really wish you had stayed in the market during the past 7 years but past is past. AS someone alluded to you seem cautious by nature, my advice don't go buck wild with the investments but get an AA you would be comfortable with, behavior and psychology seem to be the biggest hurdle for most..Best of Luck.

User avatar
CyclingDuo
Posts: 1528
Joined: Fri Jan 06, 2017 9:07 am

Re: I’ve made huge errors and hope it’s not too late

Post by CyclingDuo » Sun Dec 17, 2017 4:26 pm

Fixitfelix wrote:
Thu Dec 14, 2017 10:58 pm
CyclingDuo

Thanks for the long detailed smack and great information, it is really appreciated.

Income for now is 80/20 no reason spouse income does not climb going forward now that kids are school age. Any increase there will be put away!

Kids college funds are with a state guarantee program we have here that is well regarded and locks in guaranteed tuition at state schools or can be used elsewhere. Most say it is a great deal, will continue to contribute each year.

HSA, we have never really looked into this. We always end up with one of the plans offered not wanting to risk a High Deductible plan with 2 young kids. I will dig further.
401k will always be maxed , Solo taken advantage of or maxed if becomes 401k with employer.
Taxable, will plan on opening a taxable account and chipping away with Vanguard.

This whole deal has been a great exercise and I must say I feel 100 times better than I did this AM (and last few days if I was to be honest).

Thanks to everyone!
Coming back to this thread for you Fixitfelix because I read something this weekend that reminded me to come back and provide you with a link.

We always hesitate to recommend something to read that requires you have to sign up for something to read it, but in this case - signing up is free. The website is Seeking Alpha, and I think the only downside of signing up are the emails that come your way (which I just filter into a folder). The article I want to suggest to you is entitled Just Turned 40? How To Reach A Goal Of $1.5 Million. It compares a few scenarios including the importance of starting early at age 25, versus starting at age 40. The good news is, that based on the savings rate they suggest by starting early at age 25, you should have by the time you are age 38 a certain amount in your 401k saved up --- and you are already way ahead of the amount a 38 year old should have saved up based on what they suggest for somebody to reach $1.5M by age 62.

The article claims to reach the $1.5M goal by 62, you should end the year at age 38 with $91,662 dollars. You are obviously WAY above that already at age 38, so you are already starting ahead of the suggested path they outline as a hypothetical example. So you should easily be able to far surpass the $1.5M mark since your starting point is so much higher.

But where to from here? The article goes on to state for those who are just starting at age 40 and have $0 in savings, or for those at age 40 who have already amassed the $100K they claim you should have saved by that age in your 401k based on their hypothetical savings rate, they can still hit the $1.5M target by age 62. You'll be able to easily pass that with your current savings in your 401k and other (IRA, savings account), and your salary. So have no fear.

All that being said, to point you to this article for confirmation you are doing fine and dandy - and haven't missed that much. The power of your human capital, and two or more decades ahead of you to sock away money into your 401k, IRA's, and taxable savings will allow you to reach some excellent goals.

https://seekingalpha.com/article/413223 ... _5-million

Feel free to ignore any portfolio suggestions the article mentions, I was thinking more about the way it outlines a 25 year old, and a 40 year old with a savings table outline so both can accumulate wealth and reach a nice two comma point even if one starts at either age.
M1 Finance - Set up your Three Fund Portfolio for free using VTI, VXUS, BND!

Fixitfelix
Posts: 9
Joined: Thu Dec 14, 2017 11:17 am

Re: I’ve made huge errors and hope it’s not too late

Post by Fixitfelix » Sun Dec 17, 2017 7:41 pm

Cycling Duo

Thank you for that info! I will read the article.

Post Reply